The Effect of Moral Equality on Auditors' Ethical Behavior: The Moderating Role of Religiosity

Subject Areas : Ethics and accounting

Majid Moradi ^{1 *} , Sara Eghbal ²

1 - Assistant Professor, Department of Accounting, Saveh Branch, Islamic Azad University, Saveh, Iran
2 - Master's degree, Department of Accounting, Nasser Khosro Institute of Higher Education, Saveh, Iran

Received: 2024-06-02 Accepted : 2024-08-07 Published : 2024-09-26

Keywords: Religiosity, Ethical behavior, Professional ethics, Auditors, Moral equality,

Abstract :

1. INTRODUCTION

In today’s dynamic business environment, ethics has become a cornerstone of professional success and institutional credibility, particularly in the auditing profession. Scandals like Enron and WorldCom have exposed critical lapses in ethical behavior among auditors and corporate executives, compelling a global reevaluation of audit integrity and accountability.

Auditors hold a fiduciary responsibility to stakeholders through the verification of financial statements, a role that demands objectivity, honesty, and a high standard of ethical conduct. As watchdogs of financial integrity, any deviation in auditors’ ethical behavior not only affects public trust but also destabilizes the financial ecosystem. Despite a range of professional standards, ethical breaches in auditing remain a global concern.

Among several influencing factors on ethical behavior, moral equity—a sense of fairness, justice, and ethical sensitivity—plays a critical role in shaping auditors’ decision-making. At the same time, religiosity, as an internalized moral compass rooted in religious teachings, may reinforce or even moderate the impact of moral equity on ethical actions.

This study aims to investigate the influence of moral equity on auditors’ ethical behavior while assessing the moderating role of religiosity, thus contributing to the growing intersection between ethical philosophy, behavioral accounting, and religious values.

 

2. MATERIALS AND METHODS

This research adopts an applied, quantitative, and descriptive-survey approach. Data collection was conducted using both library research for theoretical foundations and field research through a standardized questionnaire survey. The population included 114 professional auditors working in audit firms in Tehran, Iran, during the period from September 2022 to March 2023.

Measurement Instruments:

• Moral Equity: Assessed using the 18-item questionnaire developed by Bierger (2012), comprising three sub-dimensions: moral obligation, moral responsibility, and moral repulsion. Responses were captured on a 5-point Likert scale.
• Auditor Ethical Behavior: Measured using the 15-item scale developed by Luzier (2013), which evaluates auditors’ ethical decision-making in organizational contexts.
• Religiosity: Evaluated using the 26-item scale by Glock and Stark (2005) across four dimensions—belief, emotional, ritualistic, and consequential.

Validity and Reliability:

• Content validity was established through expert reviews.
• Reliability was assessed using Cronbach’s alpha, with all variables showing coefficients above 0.78, indicating acceptable internal consistency.

Data Analysis Method:

• The data were analyzed using Partial Least Squares (PLS) through structural equation modeling (SEM).
• Confirmatory Factor Analysis (CFA) was used to validate the measurement model.
• Goodness of Fit (GOF) was assessed, with the model achieving a moderate level (GOF = 0.15).

 

3. RESULTS AND DISCUSSION

Descriptive Statistics:

• Among the 114 participants, 74.56% were male and 25.43% female.
• The majority held undergraduate degrees (64.91%) and had between 5 to 15 years of experience.

Hypothesis Testing Results:

• H1: Moral Equity → Auditor Ethical Behavior
  ➤ Coefficient: 0.534 | t = 6.18 | p < 0.01
  ➤ Conclusion: Moral equity has a significant and positive effect on auditors’ ethical behavior.
• H2: Moral Equity → Religiosity
  ➤ Coefficient: 0.948 | t = 2.94 | p < 0.01
  ➤ Conclusion: Auditors who display higher moral equity also report higher levels of religiosity, suggesting a strong internal moral framework.
• H3: Religiosity → Auditor Ethical Behavior (Moderating Effect)
  ➤ Coefficient: 0.245 | t = 4.80 | p < 0.01
  ➤ Conclusion: Religiosity significantly moderates the relationship between moral equity and ethical behavior, strengthening the impact of moral equity when religiosity is high.

Model Validity and Fit:

• All path coefficients and factor loadings were statistically significant.
• AVE values exceeded 0.5 for all constructs, confirming convergent validity.
• Composite Reliability (CR) and Cronbach’s Alpha values were all above 0.8, indicating high internal consistency.
• The model explained 89.9% of the variance in religiosity and 96.4% of the variance in ethical behavior, demonstrating strong explanatory power.

Discussion:
The findings emphasize that moral equity is a central determinant of ethical behavior among auditors. Individuals who exhibit a stronger sense of justice and fairness are more likely to adhere to ethical norms in the face of pressure or ambiguity. However, this relationship is not purely linear—it is strengthened by religiosity, which acts as a moral reinforcer.

Religious beliefs and practices, particularly when internalized (intrinsic religiosity), serve as ethical anchors. This aligns with Ajzen's Theory of Planned Behavior, wherein normative beliefs (e.g., moral fairness) influence behavior more significantly when reinforced by subjective norms (e.g., religious convictions).

Interestingly, the findings caution against superficial religious expression; only those whose religiosity leads to actual ethical transformation demonstrate lower tendencies for unethical acts like financial fraud or manipulation.

The study’s results are in line with previous research by Anastania & Fanani (2022) and Tariq et al. (2021), who emphasized that religiosity positively influences ethical decision-making in auditing. Moreover, the research contributes to the ongoing discourse about embedding ethical intelligence and religious values into professional education and organizational culture.

 

4. CONCLUSION

This study reveals significant insights into the determinants of ethical behavior in auditing, specifically:

• Moral equity directly enhances ethical behavior;
• Religiosity not only affects ethical behavior but also strengthens the link between fairness and ethics;
• Together, these elements form a synergistic framework that fosters ethical conduct among auditors.

Given the increasing complexity and pressure in audit environments, fostering both moral reasoning and spiritual consciousness appears essential to sustain public trust in financial reporting.

 

Practical Implications:

• For Firms: Promote moral equity by embedding justice-oriented values in audit training and appraisal systems.
• For Regulators: Incorporate ethical and religious values in continuing professional development programs.
• For Educators: Design curricula that bridge moral philosophy, religious teachings, and professional ethics.
• For Hiring Committees: Consider both moral and religious dimensions during recruitment, but focus on demonstrated ethical consistency, not superficial religiosity.

 

Recommendations for Future Research:

• Investigate how intrinsic vs. extrinsic religiosity moderates ethical outcomes differently.
• Explore other personality traits (e.g., ethical sensitivity, cognitive moral development) as mediators or moderators.
• Conduct cross-cultural comparisons to evaluate how cultural context influences the ethics–religion–behavior triad.
• Examine the long-term behavioral impact of moral equity training on auditor performance

 

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